High Street Banks Not Hitting Targets For New Loans
We reported last week on how the government was concerned about the figures from the major high street banks regarding the low number and amount of new loans they have offered, particularly to small and medium sized businesses.
The Chancellor of the Exchequer, Alistair Darling, held a meeting with banking bosses last week, during which he told them that they were not offering sufficient levels of business loans and that those being offered were too expensive, particularly in the current low interest rate environment and that ministers would be “looking over their shoulders” to see what they were doing to promote new loan business.
As a part of the Government’s bank bail out package, in which several banks received billions of pounds worth of government loans, it was agreed that the money would partly be used to help to offer new loans to small and medium sized businesses, many of whom were struggling financially due to the difficult economic conditions and recession, in an attempt to keep these companies from going out of business and reduce the likelihood of further unemployment.
However, two of the main banking names which have received Government funding are expected to announce this week that they are falling short of expectations. It is thought that the Lloyds banking group and the Royal Bank of Scotland (RBS) will both admit that they are not meeting the targets set by the Government for new loans to businesses, which was agreed when they received tax payer’s money in the form of a government loan.
In the meantime, Lloyds group and RBS, along with Barclays bank and HSBC are likely to announce that they have made losses of around £30 billion on bad credit loans in the first six months of this year.
